INSURANCE-REINSTATEMENT-''INSURABILITY"

lnsured took out a policy of life insurance with defendant company which contained a clause providing for reinstatement within five years after default on presentation "of evidence of insurability satisfactory to the company" and payment of overdue premiums with interest. After default in payment of premiums, insured requested reinstatement. The insured had taken up aviation in the interval between issuance of the policy and the request for reinstatement. The company agreed to reinstate on condition that the insured would agree to a modification of the policy, so that it would not cover death resulting from operation of any kind of airplane.

The insured was killed in a plane crash. The beneficiaries contend that the meaning of the term "insurability" is no broader than "good health" and since the insured was in good health at the time he applied for reinstatement, there is no consideration for his agreement to modify the policy. Held, judgment for beneficiary reversed. The existence. of serious hazards not present when the insurance was taken out will normally justify an insurer's refusal to reinstate on grounds of lack of insurability.

Schiel v. N.Y. Life Ins. Co., (9th Cir. 1949) 178 F. (2d) 729.